The Impact of Cross-border Labor Mobility on Real Estate Price Trends: A Natural Experiment

Abstract

This article evaluate how cross-border labor mobility affects real estate price trends. To overcome the endogeneity of mobility choice, a natural experiment is used: The implementation of the “Agreement on the Free Movement of Persons” (AFMP) between the European Union (EU) and Switzerland, on 1 June 2007. This policy change the eligibility criteria for obtaining a cross-border permit by removing residence restrictions and creates a natural experiment for a difference-in-differences analysis. Based on French administrative data, results show that cross-border labor mobility does not affect house price trends in French border regions. However, the implementation of the AFMP has had a positive impact on the evolution of apartment prices in both the short term (six months) and the medium term (three years). In addition, the evolution of apartment prices shows sensitivity to distance from the border and to the housing quality segment.